Shares in Portugal Telecom have risen on news on Sunday night that the Angolan President’s daughter, Isabel dos Santos, has launched a formal bid for the company.
Isabel dos Santos has offered €1.35 a share for PT which currently is controlled by Oi, the Brazilian telecoms group which want to sell its stake to pay off some of its USD18 billion debt pile and concentrate on developing its business in its home market.
PT shares climbed 14.63% at one point in today’s trading in a session marked by high liquidity with 19.6 million shares changing hands against a daily 6 month average of 12.5 million. Trading was suspended all morning to give the market a change to assess news received by the stock market regulator on Sunday night.
Oi does not like the valuation placed on the shares by dos Santos and has called the bid 'ill-timed and inappropriate.'
The other favourite to take over Portugal Telecom's near monopoly is the French company Altice, controlled by billionaire Patrick Drahi whose cunning predatorial techniques have been well tested in the past.
Altice owns two cable companies in Portugal and buying the PT assets would enable it better to compete with Vodafone and Optimus in the national market.
The offer from Isabel dos Santos is at an 11% premium to PT’s closing price last Friday and news of the bid pushed the shares up 12% to €1.37 by the end of trading today, 2 cents above her offer price.
Oi’s merger with PT was seriously compromised when the Espírito Santo company Rioforte failed to honour a €900 million bond repayment to PT thus leaving the company out of pocket at a crucial time in the merger deal.
Portugal Telecom's planned 38% shareholding in Oi was diluted to 26% amid recriminations and the sacking of the former and then current Chief Executives Baival and Granadeiro.
PT’s share price has dropped by 60% since the Rioforte revelations last summer and management incompetence in allowing shaky property company Rioforte to borrow nearly a billion euros is at thje root of the collapse in PT's reputation and financial position. Rioforte later applied for creditor protection in Luxembourg and is to be broken up and sold off by order of the court.
Bids for PT that have been received when the share price is so depressed are seen by many shareholders as opportunistic and not reflective of underlying value.
Oi is a keen, if not desperate seller of its 25% but there are many regulatory hurdles to overcome before PT, the former state monopoly until now run by devious incompetents, finds a new owner to build on its market share, service levels and product pipeline.
